Biden aims to boost chip manufacturing, but additional investment may be needed

That of President Biden $8.5 billion federal grant to Intel announced Wednesday Building some of the world's most advanced computer chips is one of the most remarkable American experiments in industrial policy since Dwight D. Eisenhower used federal funds to build the national highway system.

But rather than a fresh start in America's efforts to restore a technological capability it invented – and then all but lost – there is a significant risk that this will be the culmination of that effort.

When the CHIPS and Science Act was passed two years ago, it was billed as a down payment on the kind of long-term investment in critical sectors of the economy that has made Taiwan the dominant global player in chip manufacturing. It's a strategy that China began emulating almost a decade ago, investing year after year in high-capacity chips and batteries, quantum computing and artificial intelligence, to n 'to name just a few.

But while Mr Biden has celebrated the construction of the Intel factory as a turning point in US industrial and national security strategy, there is no prospect of a follow-up program in the near future. And quietly, Congress cut billions of dollars authorized – but never fully allocated – for research, training and production.

As Mr. Biden discusses the immediate benefits of Intel's investment – 10,000 manufacturing jobs in Arizona, New Mexico, Oregon and Ohio, and 20,000 construction jobs to move things forward – many in his administration privately worry that their strategy will not survive this situation. moment of political polarization.

That's why Mr. Biden and his Commerce Secretary, Gina Raimondo, aren't talking much about how much additional government investment might be needed if the country is serious about boosting investment in everything from from the most expensive semiconductor factories to the technologies of automobile manufacturers. will have to respect emissions mandates.

“President Biden has often spoken of this law as an 'inflection point,' a new role for federal investment in high-tech's toughest problems,” said Belfer researcher Doug Calidas. Center for Science and International Affairs at Harvard and researcher. senior vice president of Americans for Responsible Innovation, an advocacy group for emerging technologies, particularly artificial intelligence.

Patrick Gelsinger, Intel's chief executive, expressed this concern to reporters Tuesday evening.

“This problem cannot be solved in a single three- to five-year program,” Mr. Gelsinger said. “I think we will need at least one CHIPS 2 to complete this work.”

It was an optimistic assessment. Many involved in the industry believe federal investments will need to be repeated as technological challenges evolve, as well as assessments on technologies that are simply too critical for the United States to rely on foreign supply chains . Past efforts to strengthen the chip industry through one-off investments, when Japan was the main competitor, turned into spectacular failures.

The passage of the CHIPS Act in 2022 is the result of the confluence of some extraordinary events. Most striking has been the discovery, during the coronavirus pandemic, of the fragility of the supply of essential goods – from surgical masks to vaccine precursors to ordinary chips needed to produce cars and washing machines. Added to this is the growing fear of Chinese power, both to disrupt the US economy and to threaten Taiwan, where more than 90% of the world's most complex and advanced semiconductors are manufactured.

Ms. Raimondo and Avril D. Haines, Director of National Intelligence, briefed senators in the weeks before the bill's passage about the remarkable vulnerabilities in the U.S. defense industrial base and how shutting down certain technologies could immobilize missiles and bring production of combat aircraft to a record level. a break. The specter of a rising, manipulative China capable of holding Taiwan's semiconductor production centers hostage attracted enough Republicans to win a real bipartisan majority. In the Senate, the bill passed by a vote of 64 to 33.

Even then, there were skeptics. Morris Chang, the MIT-trained engineer who left Texas Instruments and founded Taiwan Semiconductor Manufacturing Company, argued that money alone would not be enough to replicate the magic he had created. He called the billions in subsidies “a very costly and futile exercise.”

At the heart of Mr. Chang's criticism was the argument that even if Intel copied Taiwan Semiconductor's basic strategy, becoming a “foundry” producing chips designed by Apple and Nvidia, American engineers would not devote the grueling hours and perfectionism required. to succeed.

But industrial policy advocates offered a different criticism: Mr. Biden's push to bring manufacturing back home came too late, and the bill was far too modest to propel the private investment needed for a true manufacturing renaissance. .

Election year politics adds yet another level of difficulty.

Former President Donald J. Trump launched regular attacks on another form of industrial policy: Mr. Biden's incentives for the purchase of electric vehicles, a key part of his climate agenda.

These cars have become part of Mr. Trump’s campaign rallies rants. He argues, without any evidence, that electric cars will “kill” the U.S. auto industry and said the Biden administration has “ordered a tough job on Michigan's manufacturing industry” in attracting buyers to electric vehicles through tax breaks and other subsidies.

But even Mr. Biden seems somewhat hesitant to fully support his own policies. The original CHIPS Act authorized the United States to spend $35 billion on scientific and innovative research through government agencies in 2025; Mr. Biden's budget request, released last week, is closer to $20 billion.

“The speech is much more impressive than the budget figures,” Calidas said.

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